20 ms·

Cryptocurrencies – An Assessment by Reserve Bank of India

152 points by ajonit 5y ago

bitcoinmonger2 5y ago
It's interesting how they disparage cryptocurrency by defining it as not being a "currency" and having no utility, yet advise banning it as it competes as a currency to the Rupee.
- MereInterest 5y ago
  The two are not mutually exclusive. Homeopathy competes with medicine, despite not being medicine and providing no benefit.
  - eric_cc 5y ago
    But in this case, crypto is superior to government created currency is just about every objective way. The only argument I feel is still valid is in regards to volatility. But that is mostly because crypto is still tethered to fiat trading pairs. Once it is truly stand-alone and loses that volatile connection to fiat, there will be no remaining compelling arguments against it. At that point, it’ll be time to show empathy to the biggest fiat bag holders.
    - yunohn 5y ago
      > At that point, it’ll be time to show empathy to the biggest fiat bag holders. Do you mean the majority of the world’s population? The goal is make everyone except crypto-hodlers into fiat bag holders? Edit: more inclusive
      - eric_cc 5y ago
        That would be really sad and I genuinely hope it doesn’t happen that way. Honestly, it’s one of my biggest fears. How do we make such a seismic shift with the fewest number of casualties? > crypto-bros This makes me lose respect for your entire take. Name-calling a diverse group of people is always a display of ignorance and bigotry.
        yunohn 5y ago
        Yes, but you didn’t answer my question with anything meaningful, despite my direct interpretation of your stance on this. Surely, you should think of an solution before such a hopeful proposal?
        eric_cc 5y ago
        I do speculate that there will be a massive number of casualties during the transition from fiat to cryptocurrencies, sadly. But it’s NOT the goal. I just don’t believe it is possible to cleanly move from fiat to cryptocurrency in a clean, neat, and equitable way. It’ll be chaotic, disruptive, and sad in many ways. And despite all that, I believe it’ll be worth it. Much like other chaotic events that resulted in increased freedom for regular citizens. Future generations will benefit greatly once the transition is completed. And THAT is the goal. To create a world where sound money is the default. Where you can work for money, save it, and live your life without worrying about what bullshit the fed is up to.
        yunohn 5y ago
        > I do speculate that there will be a massive number of casualties during the transition Okay, but how massive? What is acceptable to you relative to the world population? > But it’s NOT the goal. Why is there so much marketing and messaging around “Don’t be left behind”, similar to how you phrased it earlier? > Much like other chaotic events that resulted in increased freedom for regular citizens. Maybe you could provide some examples that display a similar situation? > live your life without worrying about what bullshit the fed is up to. Monetary policy needs to influence wages etc, and lead to equitable outcomes vs inflation. Crypto won’t solve societal ills like this.
        eric_cc 5y ago
        > Why is there so much marketing and messaging around “Don’t be left behind”, similar to how you phrased it earlier? I can answer for myself. I speculate that a transition from fiat to crypto is inevitable unless a black swan event occurs. (Eg a new way to represent value is invented that is superior to fiat and crypto that is currently inconceivable today) If the transition to crypto does occur, it clearly benefits early adopters. In late phases of the transition, there will be very few people willing to trade crypto for fiat. Herein lies ammo for the crowd shouting “CRYPTO IS A PONZI”. But the truth is that all desirable possessions are this way. If you bought beach-front property in a great city decades ago, you’re going to be able to sell it to the next “sucker” for a huge profit. Likewise, Apple stock. Likewise, a baseball rookie card. Etcetc > Okay, but how massive? This is a difficult question. It depends on if the transition is a gradual, long term grind. Or if some event occurs that shocks the system and causes a mad rush to cryptocurrencies. I hope for the former and fear for the latter.
  - mistrial9 5y ago
    but I used homeopathic remedy and it helped me, and no one telling me otherwise will change my mind, since I directly experienced relief. Are there parallels here for the many uses of some crypto? "cry for me, Argentina"
- mapcars 5y ago
  They do call it private currency
- sundarurfriend 5y ago
  > yet advise banning it as it competes as a currency to the Rupee. You're (perhaps unintentionally) misrepresenting their case as saying "competes as a currency" being the main reason for the ban. They lay out the many reasons for it, including (and I'm giving their opinion here, not mine) its inherent lack of stability, the energy usage, control being in the hands of foreign companies/economies, and also that when people try to use it as a currency, it can lead to destabilization because it tilts the advantage in favour of currencies of A[dvanced]E[conomie]s. The last point is the one you mention, and even it isn't a concern about cryptocurrencies themselves being competition, just it opening doors for stronger and potentially destructive competition from already stronger currencies.
ajonit 5y ago
Everyone should read this. I loved this assessment of cryptocurrencies, with no usage of any complex financial jargon.
- rramadass 5y ago
  Right. It explains the Policies behind a possible use of Cryptocurrency which might create problems for the Sovereignty of the State and Stability of Financial Systems. This is a very valid reason to be cautious. However i am not very clear as to how the US (and some other countries) are regulating it? What are they doing differently?
nathias 5y ago
> they have no intrinsic value currently there are more crypto currencies with intrinsic value than there is goverment crypto, as fiat by definition has no intrinsic value The link is more like an opinion piece than an analysis.
- RugnirViking 5y ago
  if we are suggesting that fiat has no intrinsic value, cryptocurrencies definately also have no intrinsic value, unless you can feed and shelter yourself with the factors of very large prime numbers
  - nathias 5y ago
    We aren't suggesting anything, that's what fiat means. There are projects of cryptos backed with different things, for example stable coins with dollars, or synthetic stable coins with overcollaterized loans of other cryptos.
    - RugnirViking 5y ago
      if a cryptocurrency is backed by dollars, gold or anything else, it is not "intrinsically" worth anything, it is only worth anything because of what it is backed by.
      - nathias 5y ago
        that's what intrinsically means in this context, it's a dumb term but it is what it is
    - cuteboy19 5y ago
      But stablecoins are identical to central banks. They involve a central authority pinky promising not to print more of the token. And surprise surprise they do print as many as they want (USDT/USDC)
      - 5y ago
akamaozu 5y ago
This quote in the conclusion caught me off-guard: > Crypto messaging does not appear to be directed at the rational or sensible.
- vondro 5y ago
  Well, this piece has bits of reasonable analysis mixed with wishful thinking of central authorities it seems. Don't ask the winery owner if their wine is good, as they say. But anyway, it's very readable without almost any financial jargon, so anybody can read it and make his own mind on the topic.
surajs 5y ago
janandonly 5y ago
In Holland we have a saying that roughly translates as "don't let a butcher judge his own meat". I guess letting a Bank judge his own competitor is an even worse offence?
- NicoJuicy 5y ago
  Are you judging this as a user of the Blockchain? Which would be more appropriate to your quote, i believe. Ps. Heb alvast die uitdrukking nog nooit gehoord in België ( Never heard that expression in Belgium)
  - me_me_me 5y ago
    10/10 Kings agree democracy is inferior to monarchy, therefore it will be banned.
  - rapnie 5y ago
    Here's an explainer of the saying (in Dutch) and some possible English alternatives, like : "That’s like grading your own exam”. And literally a "conflict of interest". https://hoezegjeinhetengels.nl/slager-keurt-zijn-eigen-vlees/ https://hoezegjeinhetengels.nl/slager-keurt-zijn-eigen-vlees...
  - jacquesm 5y ago
    "De slager die zijn eigen vlees keurt" Over het algemeen gebruikt als de producent een oordeel geeft over zijn product. als in "Wij van WC eend ..."
- astoor 5y ago
  Not really like-for-like though - in this case a more appropriate saying would be "don't let a licenced professional purveyor of meat with provenance trails judge unlicenced masked street-vendors of meat-like substances of unknown origin during a time of unprecedented household pet disappearances".
  - thebean11 5y ago
    The inner workings of Bitcoin are a lot less unknown than those of banks or governments. You might not agree with the principles of Bitcoin, or the valuation, but it’s certainly transparent.
hd4 5y ago
> 37. We have seen that crypto-technology is underpinned by a philosophy to evade Government controls. Cryptocurrencies have specifically been developed to bypass the regulated financial system. These should be reason enough to treat them with caution. Well duh. Way to prove the point that we need to evade government control. Zero self-awareness. No examination into why people may not trust their government. Just do what we say. This from the same government that already demonetized* the currency used by the same people they want to be trusted by.
- ajonit 5y ago
  This from the same government that already devalued the currency used by the same people they want to be trusted by It was “demonetised”. To be fair and accurate context, a window of few months was provided to get the demonetise notes replaced with the equivalent amount of new notes.
  - danuker 5y ago
    It is not the numbers on the notes that matter, it is the loss of purchasing power. In 1995, 1 USD = 32 INR. In 2022, 1 USD = 75 INR. Add to that the fact that USD is also losing value itself.
    - ajonit 5y ago
      Saying “devalued”, OP referred to the Nov 2016 demonetisation of INR 500 and 1000 currency notes that happened in India.
      - hd4 5y ago
        Correct, thanks for pointing that out, I edited the original comment.
    - ClumsyPilot 5y ago
      There are many things that happened in the global economy, banking, supply chains and multinational corporations. How much of this change is the fault of Indian government?
lekevicius 5y ago
Key conclusion: > All these factors lead to the conclusion that banning cryptocurrency is perhaps the most advisable choice open to India. And so they may, for probably 4th or 5th time. Cryptocurrency on- and off-ramps can be somewhat controlled, but overall it's a pretty difficult thing to ban in practice.
- captn3m0 5y ago
  The average investment (as per RBI) in crypto assets is 3000 INR or so, the vast majority of which is via crypto exchanges. The earlier bans were indirect (RBI asking Banks asking Payment processors to close down exchange ramps) and didn't stand up to legal scrutiny. A direct ban via legislation ought to work in practice. Exchanges (and other companies offering crypto in India) have already de-risked against this by getting registered in Singapore. A ban doesn't have to work perfectly, it just has to dissuade enough users.
  - Proven 5y ago
  - sundarurfriend 5y ago
    > A direct ban via legislation ought to work in practice. > A ban doesn't have to work perfectly, it just has to dissuade enough users. That much it can probably accomplish, especially given the current level of censorship of the Internet.
- retube 5y ago
  > but overall it's a pretty difficult thing to ban in practice. That applies to just about everything. We have laws against tax evasion, fraud, murder... but people can (and do) still do these things. Just because a law doesn't or can't physically stop people doing things doesn't mean we shouldn't have the law. The point is, if it is banned then you will severely constraint the ecosystem. On-off ramps and other intermediators will have to shut down, institutional participants will be forced to withdraw etc etc. Sure no doubt a handful of participants will flaunt the rules and continue to participate, trying to keep the dream alive, but for all practical purposes it'll be dead in the water.
hanselot 5y ago
g5095 5y ago
I work for one of the most well known, fully decentralised, opensource crypto currencies. I'm therefore quite familiar with our objectives (to take over the world, mwhaha) .. but no seriously: 1. Govts can (and should) regulate -exchanges- who are setting the exchange rate at the same time as offering to be the bank for poorly educated crypto holders, so they can use folks money to buy low and sell high. 2. Govts (already) make it a legal obligation to declare and pay tax, crypto is no different than dealing in cash. People who break the laws of their country should be tried under those laws, ie: tax evasion.. this isn't new to crypto. What the RBI are saying is they object to crypto removing their ability to.. (see point 1.) control the supply. When they talk about managing the economy, what they mean is 'their ability to print money'. Furthermore they argue their ability to make up the rules as they go is enshrined and justified by the notion that 'that's how it's always been done'.. well welcome to technological advancement? Crypto is FAR from perfect right now but it is based on a premise that a truly fair and un-cheatable system is possible, and that has govts terrified.
- digitcatphd 5y ago
  Unfortunately, I suspect this will continue. There is undoubtedly a place for Crypto, but I would advise those who believe it will replace 'fiat' to take a course in economics or learn the role of the federal reserve and why it was created in the US. Political views aside, many believe economic policy to be a key pillar of a government and anything threatening this power will be squashed at all costs in countries where this pillar exists. Where this pillar exists being the key here, which is why we are seeing national adoption in countries that lack it. Despite this, an outright ban is indeed lazy and removes a country from the global Crypto economy.
  - m00dy 5y ago
    Just take a walk in one of the popular neighborhoods in Istanbul and ask who Jerome Powell is to one of the random people there. They will tell you. Federal Reserve was created for some reason in the past. But, I think we might need something better now.
    - 5y ago
insaider 5y ago
I hope other governments follow suit
honungsburk 5y ago
India doesn't have the power to use a block explorer. It is to advanced. >AEs have the political power to control the crypto companies. The recent instance >where the US recovered bitcoins from the hackers of the oil pipeline in US, is an >example that notwithstanding claims of non-traceability of cryptocurrencies, AE >Governments wield enough power to access the records. India or most other > countries would lack such advantages.
- ClumsyPilot 5y ago
  What? Why?
  - sundarurfriend 5y ago
    I think it's a sarcastic comment, saying a "block explorer" is all it takes to trace these and implying that the document is dumb for saying otherwise. I don't know the details of the case well enough, but this is a usual type of comment on HN, and my a priori assumption would be it's probably oversimplifying reality and ignoring context as is also usual.
- jeffparsons 5y ago
  > claims of non-traceability of cryptocurrencies Uh, who's claiming that? Cryptocurrency transactions are _super_ traceable.
  - bo1024 5y ago
    The same speaker claims it earlier, for one. The speech seems mostly well informed but that stuck out.
- tejasvi88 5y ago
  They are referring to > AEs have the political power to control the crypto companies. You won't find scammer's name on block explorer.
danuker 5y ago
> Thus, increased acceptance of cryptocurrencies would result in effective ‘Dollarization’ of our economy6. Dollarization, it is well understood, would undermine the ability of authorities to control money supply or interest rates, as monetary policy would not have any impact on the non-Rupee currencies or payment instruments. When that happens, India loses not just its currency, a defining feature of its sovereignty, but its policy control of the economy. With loss of traction for monetary policy, the ability to control inflation would be materially weakened. If I transacted in, say, cans of beans, would that also undermine sovereignty and control of the economy? Sounds to me that the mentioned sovereignty and control are very fragile. Sovereignty should come through consent of citizens and voluntary participation, not tyranny. And since the Rupee devalued 2.4 times against the USD in the past 27 years, I argue that such inflation control was abused, punishing savers and encouraging debt, essentially translating to financial repression.
- horsestaple 5y ago
  Yes, if you convinced a lot of people to transact in cans of beans, you would be undermining the control of the government. Just look at countries that don't have a (viable) currency. They are using dollars or euros and are subject to a foreign powers monetary policy. Also no country defines sovereignty through voluntary consent. Laws applies to you whether you agree or not.
  - danuker 5y ago
    Democracy, as opposed to oligarchy, is where the people are ultimately sovereign. Sure, laws apply to the ones disagreeing, but in theory, the government serves the people, not rules it. Central banks however, have a large amount of control over everyone's financial life, yet the signal from voting is only very dimly forwarded to this institution, and there are limited checks and balances governing it.
- simion314 5y ago
  >If I transacted in, say, cans of beans, would that also undermine sovereignty and control of the economy? From what I seen in my country's past the government will always get the blame and is asked to pay when people get scammed, then the goverment adds new laws to prevent future scams. Say you borrow some money to buy a house and you use a foreign currency, and a year later that currency doubles, you get screwed. This actually happened and people asked the government to fix it. Sorry for poor details I don't like financial stuff so avoid it if possible https://www.businessinsider.com/the-swiss-franc-surge-crushed-many-europeans-financially-2015-2 https://www.businessinsider.com/the-swiss-franc-surge-crushe... https://en.wikipedia.org/wiki/Caritas_(Ponzi_scheme) https://en.wikipedia.org/wiki/Caritas_(Ponzi_scheme) It's obvious that giving the power to crash your economy to a foreign group is losing sovereignty, what happens if some hackers or government crashes bitcoin? I suspect the government will be blamed as usual because it did not see it coming and prevent it. As long as the government is not imposed by a foreign nation or some Illuminati then I would say the majority of the population should also take all the criticism not only the institution. IMO if the population wants the government to protect them from scams and foreign financial group playing with their money then it is what it is, a weakness of democracy, where majority rules.
yossarian1408 5y ago
The more of your own wealth tied up in a crypto asset, the more you have an interest in ensuring no manipulation occurs. An exact inverse to the speaker's thesis. Crypto is underrated for it's incentive solutions from a praxeological standpoint, not just the technical/cryptography one
- bluecalm 5y ago
  It's like saying that more aluminum you own the more you have an interest in ensuring no manipulation. Same for oil. No idea what praxeology says about it but it's definitely not what happens in the real world.
  - yossarian1408 5y ago
    It's not like that at all. Aluminium is a commodity good - it holds value regardless of other people's valuations and expectations. Cryptocurrency is entirely dependent on other people agreeing that it is valuable, and that means trust and utility.
- Traster 5y ago
  That's not right though, the more you have invested in crypto the more you're incentivized to try and boost the value of crypto. That's not the same thing as saying no manipulation occurs. In fact, manipulation is good for you as long as it increases the value of crypto. If you plan to hold crypto long term manipulation might be bad in that it might damage the long-term prospects of crypto, but that's literally just a question of what time horizon your investment is vs what time horizon the manipulation happens. If Tether turns out to be a scam it only matters if it turns out to be a scam before you sell.
  - yossarian1408 5y ago
    > If you plan to hold crypto long term No, if crypto becomes the dominant medium of exchange. In this way it would be determined by factors of supply and demand same as money has always been for thousands of years. The dollar is more susceptible to manipulation than crypto. If you cared about manipulation, you would be an advocate for literally anything rather than the petrodollar - crypto included.
crispyambulance 5y ago
They pretty much nailed it in the last paragraph... > Writing in the New York Times Adrian Chen noted as far back as 2013 that Bitcoin is built on a weird mix of speculative greed bolstered by a utopian cyberlibertarian ideology and likened it to a digital gold rush. Indeed, hyperbole continues to characterise all aspects of the crypto world. Crypto messaging does not appear to be directed at the rational or sensible. Adrian Chen's article... https://www.nytimes.com/2013/11/27/opinion/much-ado-about-bitcoin.html https://www.nytimes.com/2013/11/27/opinion/much-ado-about-bi... Dan Olson's now epic "Line Goes Up" https://youtu.be/YQ_xWvX1n9g https://youtu.be/YQ_xWvX1n9g ... a masterful takedown of crypotcurrency and NFT's, it also demonstrates what a shit-show this has all become. Much MUCH worse than in Chen's 2013 article.
dade_ 5y ago
A reasonable conclusion for advice to a government. Currency controls and manipulation are the most powerful controls nation state governments have. The important question remains, is what is good for the government, good for its people?
- loup-vaillant 5y ago
  > The important question remains, is what is good for the government, good for its people? If the answer is close enough to "no", then you know this is not a democracy.
  - pinephoneguy 5y ago
- Gareth321 5y ago
  I am increasingly feeling that the majority in any democracy is willing to use authoritarian methods to achieve their goals. They are suspending due process in Canada because of a peaceful protest. This allows banks to freeze accounts and seize assets. This is what China does. If I were Canadian, I would be very concerned about the safety of my money in Canadian dollars in a Canadian bank. Canada is just the latest example of this kind of creeping authoritarianism. I wonder if they realise how much this will hurt the trust in the Canadian dollar and Canadian financial institutions, and the massive push for crypto adoption that will result.
  - enkid 5y ago
    Democracy isn't about getting rid of government action. It's about enabling the people to control that action. These freedom convoys are protesting in an illegal way that disrupts people's ability to live their lives by blocking traffic, and have kept it up for weeks. At what point is the protest imposing unacceptable tyranny on the individuals who live on those streets? Certainly you would be against a government blockading people's homes.
    - 5y ago
jasfi 5y ago
Crypto trading is also interesting, if you're into technical analysis. I'm working on an automated system: https://tradecast.one https://tradecast.one
naveen99 5y ago
Banning cryptocurrency is as pointless as banning remote work or exports. India should just add us style property taxes instead.
- whywhywhywhy 5y ago
  > India should just add us style property taxes instead How's giving the government more money going to solve anything?
  - naveen99 5y ago
    It’s just encouraging productive use of capital and a more transparent, liquid, financialized real estate industry. Probably good for the economy. Would reduce housing prices probably too.
bo1024 5y ago
This would have been reasonably accurate if Bitcoin was the only cryptocurrency. But no mention of dapps, web3, etc. means the speaker is missing a huge portion of the space.
Traster 5y ago
For me the most important part of this article is the comparison of how Bitcoin operates in the US vs other less powerful economies. Specifically how cryptocurrencies are primarily priced in dollars, the US has enough international power and control over the existing financial system to leverage control over crypto-exchanges, and how moving economic activity out of the Rupee into crypto-currencies significantly risks damaging the the rupee. This is something that is probably often missed by people in this conversation but it's very common in economies with weak currencies to see other strong currencies used in their place (plenty of places in Turkey accept dollars and euros for example) and this has a real impact on government policy.
- eric_cc 5y ago
  The hope is that in the future crypto breaks free of the connection to fiat. Rather than comparing crypto against $USD it will be compared against $BTC. This is why it’s essential for $BTC to maintain and expand upon its role as a source of value. It’s the best path we have to break the bondage to $USD and other government-controlled fiat currencies.
  - nemacol 5y ago
    Forgive my ignorance but that sounds like comparing future crypto to the USD but with an extra step.
    - eric_cc 5y ago
      Sadly I think the only people that would do the extra step will be older people who grew up with USD and still desire it. Do you mentally compare USD to other random obscure currencies? Of course not. And in a future when USD has been replaced, nobody will care to mentally determine USD prices. Another way to consider it: when you go to the grocery store, you don’t think about how many sats something costs. Because USD is still king.
  - xxs 5y ago
    >The hope is that in the future crypto breaks free of the connection to fiat wow, I don't know what kind of hope this is, and I avoid commenting on any crypto currency[0]. Since the comment appears to be genuine, I've felt compelled. [0]: calling it them "crypto" is an insult to the rest of the cryptography, though
boda11 5y ago
There is an actual useful use for cryptocurrencies which is sending money anywhere around the world instantly with small fees That is incredibly useful for developing countries and the ecosystem of p2p allow in and out to fiat in a relatively smooth way
- blocked_again 5y ago
  You do know that India has probably one of the best centralized payment systems in the world right? Read about UPI aka Unified Payment Interface.
  - eric_cc 5y ago
    Nice try, India!
- cuteboy19 5y ago
  No one in India uses it for that purpose. UPI is significantly better than anything crypto has come up with. Crypto is purely a gambling vehicle in India
  - boda11 5y ago
    can you send money to another country using UPI? if you can probably it uses swift under the hood crypto currency network replaces swift which is a more cumbersome system with higher price and delay of days to send money between countries
    - cuteboy19 5y ago
      So instead of one exchange rate you would need to deal with two. Not to mention the risk of the crypto in question being insanely volatile. Remittances are huge in India but no one really uses crypto for this purpose
- Kbelicius 5y ago
  Which isn't a technical but a political problem. So what you are saying is that cryptocurrencies are a technical solution to a political problem. I would love to hear more about that.
glofish 5y ago
Any bitcoin related assessment that cites the Tulip mania is inherently suspect. It conflates two different, unrelated concepts: the tulips and the mania. We have not banned tulips because of the Tulip mania. Bitcoin and blockchain are genius technology, on par with the greatest achievements in mathematics and theoretical physics. That some of this technology is misused and misinterpreted, incorrectly assessed, used for scams, has no bearing on the technology itself.
- sailingparrot 5y ago
  > Bitcoin and blockchain are genius technology, on par with the greatest achievements in mathematics and theoretical physics. How one can say that with a straight face is beyond me. And I say this as someone that find blockchain mechanisms/ideas very interesting.
  - glofish 5y ago
    a distributed trusted ledger, where each selfish agent has to cooperate, while all transaction are out in public ... all on mathematical foundations, and it actually works in practice? how is that not genius?
    - sailingparrot 5y ago
      Yes it's pretty amazing I agree. I don't think your appreciation of blockchain is wrong. I think it is your appreciation for the greatest achievements in theoretical physics and mathematics that is.
    - bally0241 5y ago
      I agree with you one this...but for whatever reason it is not the prevailing opinion on HN. I think that is largely due to the fact that many people on here knew of it early enough to become fabulously rich, but dismissed it out of hand without really looking into it.
      - eric_cc 5y ago
logicalmonster 5y ago
When evaluating any information from any source, whether from a government or not, you should keep human biases in mind. The thing to keep in mind here is that India's bankers are giving their opinion on the current biggest competitor to their power and livelihoods. And the report says as much. > The basic purpose of blockchain, or more generally the distributed ledger, the technology on which these crypto-products run, is to make financial intermediation, and therefore banks, redundant. Imagine thinking any bureaucracy can give an honest assessment on the thing that makes them obsolete. Any opinion they give out should be evaluated through the lens of them losing their power and livelihoods. Any report from central bankers on crypto is the equivalent of McDonalds executives giving their opinion on Burger King.
- throw3838 5y ago
  Blockchain does not make banking obsolete. We can already do business by moving raw currency around, but hardly anyone does that. There is a whole crypt banking sector that provides exchanges, custody, lending... And if you take inflation overhead, consumed by miners and other services to keep BTC or ETH running (5% to 10% annually), there is not much advantage over existing banking.
  - nextaccountic 5y ago
    > Blockchain does not make banking obsolete It doesn't, but Satoshi thought it would. See for example the Genesis block. > There is a whole crypt banking sector that provides exchanges, custody, lending... Back in the day, the idea was to make every citizen financially sovereign. It didn't work in practice because those services you mention are useful. (Just like crypto has trouble working as a payment infrastructure, because chargebacks are an useful and demanded service)
- JumpCrisscross 5y ago
  > India's bankers are giving their opinion on the current biggest competitor to their power and livelihoods Some of crypto’s biggest backers are on Wall Street. For obvious reasons. Crypto is making Wall Street billions while letting them preach from beneath a populist veneer.
crhutchins 5y ago
They are making ties and connections on fiat and cryptocurrency, which is not very good for the long term.
wtmt 5y ago
Some context to note: * The RBI (Reserve Bank of India) Governor and Deputy Governor have, more than once, publicly expressed the view that all cryptocurrencies should be banned for all purposes. A few years ago the RBI even instructed banks not to work with cryptocurrency exchanges, but that was overruled by the Supreme Court two years later with the justification that there was no law to do that and that this action was disproportionate. * The Prime Minister of India, Narendra Modi, has publicly made statements that cryptocurrency is “spoiling the youth” and that all countries should come together to control (which in his view is banning) them. * In the recent annual budget announcements, the finance minister announced an unexpected 30% tax on all income from “virtual digital asset transfers” without allowing any set offs (except the base cost). Also added was a 1% TDS (tax deducted at source, or tax withholding) for every transaction calculated on the transaction amount! Given these biases against cryptocurrencies and the strict need for capital and current account controls on Indian Rupee transfers that the RBI is addicted to manage (it actually prefers a steadily but continuously depreciating Rupee), it’s not a surprise that public utterances about macroeconomic stability would be published as a stance. The RBI and the Finance Ministry have been struggling to get a grip on the economic levers (with COVID making it worse), and believe that anything they cannot control easily is a threat to them, first and foremost. The Indian government is more focused on protectionism and controls than on capitalizing on opportunities.
- ngc248 5y ago
  >>> The Indian government is more focused on protectionism and controls than on capitalizing on opportunities. Crypto is an opportunity? Heck no, when you want to replace the existing system there must be some outstanding benefit which the new system should provide. Crypto has no such thing. In fact it would be trivial for the government to come out with some e-currency since UPI (https://en.wikipedia.org/wiki/Unified_Payments_Interface https://en.wikipedia.org/wiki/Unified_Payments_Interface) is already in place.
  - csomar 5y ago
    I think the parent poster means: Opportunity to use crypto to generate positive capital flows.
actuator 5y ago
I think this seems like a fair evaluation of it. There is good reason why common public should be dissuaded from thinking of it as currency. There are some guarantees that people get with the current system. - Money you hold in a bank can't just evaporate if the bank collapses. It is insured in most countries like US, UK, EU upto an amount. - Even on things we speculate, lik stock prices just because your broker collapses doesn't mean you lose the stocks you own. In case of crypto, your broker can go down with keys to your crypto.
jrm4 5y ago
For a document created by a government, I'm wildly impressed. Pretty solid. Very unsurprised at the skepticism, of course. There's a lot of to-be-expected fear over loss of power, but even as someone who believes crypto can be a good thing eventually, I appreciate this analysis.
dav_Oz 5y ago
> 20. Historically, private currencies have resulted in instability and therefore have evolved into fiat currencies over centuries. The retrograde step back to private currencies cannot be taken simply because technology allows it (it always did, actually) without any consideration for the dislocation it causes to the legal, social and economic fabric of society. Every private currency will eventually replace the Rupee to some extent. Consequently, the role of the Rupee as a currency will be undermined. With one or more private currencies being allowed, there would be parallel currency system(s) in the country. Thus, increased acceptance of cryptocurrencies would result in effective ‘Dollarization’ of our economy. Dollarization, it is well understood, would undermine the ability of authorities to control money supply or interest rates, as monetary policy would not have any impact on the non-Rupee currencies or payment instruments. When that happens, India loses not just its currency, a defining feature of its sovereignty, but its policy control of the economy. With loss of traction for monetary policy, the ability to control inflation would be materially weakened. The paper misses the context in which Bitcoin emerged. The "Global Financial Crisis" woke up a lot of people to the reality of "fiat" (dixitque Nixon fiat pecunia et facta est pecunia) and its implications. During this time in Germany Merkel coined the words "Bankenrettung" ("rescue of banks") and "alternativlos" ("no alternative"/"the only way"). This indeed did cause - at least in the western wolrd and in some parts of the middle class - a dislocation [...] [of] the legal, social and economic fabric of society. Now, today, 15 years later the vast majority of the so called cryptocurrency-market does not even try to emancipate itself from the financial power that be, no, it has been effectively captured and tamed by "AE" and become one of their convenient tools they can use to "destabilize" EE's, playground for CBDC, another rigged enrichment game ... The people who became "lambo" realized pretty fast how convenient the system is once you are rich. So they mostly don't really challenge the establishment except in "style", too "risky", ya know.
bitcoinmonger2 5y ago
> For all the hype about a revolutionary innovation, cryptocurrencies themselves do not appear to be designed to meet any need in the finance space that is currently not being met or to meet existing needs more efficiently. Why go through the effort of a ban? Sounds like it will die off naturally.

152 points by ajonit 5y ago

It's interesting how they disparage cryptocurrency by defining it as not being a "currency" and having no utility, yet advise banning it as it competes as a currency to the Rupee.

MereInterest 5y ago
The two are not mutually exclusive. Homeopathy competes with medicine, despite not being medicine and providing no benefit.
- eric_cc 5y ago
  But in this case, crypto is superior to government created currency is just about every objective way. The only argument I feel is still valid is in regards to volatility. But that is mostly because crypto is still tethered to fiat trading pairs. Once it is truly stand-alone and loses that volatile connection to fiat, there will be no remaining compelling arguments against it. At that point, it’ll be time to show empathy to the biggest fiat bag holders.
  - yunohn 5y ago
    > At that point, it’ll be time to show empathy to the biggest fiat bag holders. Do you mean the majority of the world’s population? The goal is make everyone except crypto-hodlers into fiat bag holders? Edit: more inclusive
    - eric_cc 5y ago
      That would be really sad and I genuinely hope it doesn’t happen that way. Honestly, it’s one of my biggest fears. How do we make such a seismic shift with the fewest number of casualties? > crypto-bros This makes me lose respect for your entire take. Name-calling a diverse group of people is always a display of ignorance and bigotry.
      - yunohn 5y ago
        Yes, but you didn’t answer my question with anything meaningful, despite my direct interpretation of your stance on this. Surely, you should think of an solution before such a hopeful proposal?
        eric_cc 5y ago
        I do speculate that there will be a massive number of casualties during the transition from fiat to cryptocurrencies, sadly. But it’s NOT the goal. I just don’t believe it is possible to cleanly move from fiat to cryptocurrency in a clean, neat, and equitable way. It’ll be chaotic, disruptive, and sad in many ways. And despite all that, I believe it’ll be worth it. Much like other chaotic events that resulted in increased freedom for regular citizens. Future generations will benefit greatly once the transition is completed. And THAT is the goal. To create a world where sound money is the default. Where you can work for money, save it, and live your life without worrying about what bullshit the fed is up to.
        yunohn 5y ago
        > I do speculate that there will be a massive number of casualties during the transition Okay, but how massive? What is acceptable to you relative to the world population? > But it’s NOT the goal. Why is there so much marketing and messaging around “Don’t be left behind”, similar to how you phrased it earlier? > Much like other chaotic events that resulted in increased freedom for regular citizens. Maybe you could provide some examples that display a similar situation? > live your life without worrying about what bullshit the fed is up to. Monetary policy needs to influence wages etc, and lead to equitable outcomes vs inflation. Crypto won’t solve societal ills like this.
        eric_cc 5y ago
        > Why is there so much marketing and messaging around “Don’t be left behind”, similar to how you phrased it earlier? I can answer for myself. I speculate that a transition from fiat to crypto is inevitable unless a black swan event occurs. (Eg a new way to represent value is invented that is superior to fiat and crypto that is currently inconceivable today) If the transition to crypto does occur, it clearly benefits early adopters. In late phases of the transition, there will be very few people willing to trade crypto for fiat. Herein lies ammo for the crowd shouting “CRYPTO IS A PONZI”. But the truth is that all desirable possessions are this way. If you bought beach-front property in a great city decades ago, you’re going to be able to sell it to the next “sucker” for a huge profit. Likewise, Apple stock. Likewise, a baseball rookie card. Etcetc > Okay, but how massive? This is a difficult question. It depends on if the transition is a gradual, long term grind. Or if some event occurs that shocks the system and causes a mad rush to cryptocurrencies. I hope for the former and fear for the latter.
- mistrial9 5y ago
  but I used homeopathic remedy and it helped me, and no one telling me otherwise will change my mind, since I directly experienced relief. Are there parallels here for the many uses of some crypto? "cry for me, Argentina"
mapcars 5y ago
They do call it private currency
sundarurfriend 5y ago
> yet advise banning it as it competes as a currency to the Rupee. You're (perhaps unintentionally) misrepresenting their case as saying "competes as a currency" being the main reason for the ban. They lay out the many reasons for it, including (and I'm giving their opinion here, not mine) its inherent lack of stability, the energy usage, control being in the hands of foreign companies/economies, and also that when people try to use it as a currency, it can lead to destabilization because it tilts the advantage in favour of currencies of A[dvanced]E[conomie]s. The last point is the one you mention, and even it isn't a concern about cryptocurrencies themselves being competition, just it opening doors for stronger and potentially destructive competition from already stronger currencies.

ajonit 5y ago

Everyone should read this. I loved this assessment of cryptocurrencies, with no usage of any complex financial jargon.

rramadass 5y ago
Right. It explains the Policies behind a possible use of Cryptocurrency which might create problems for the Sovereignty of the State and Stability of Financial Systems. This is a very valid reason to be cautious. However i am not very clear as to how the US (and some other countries) are regulating it? What are they doing differently?

nathias 5y ago

> they have no intrinsic value currently there are more crypto currencies with intrinsic value than there is goverment crypto, as fiat by definition has no intrinsic value The link is more like an opinion piece than an analysis.

RugnirViking 5y ago
if we are suggesting that fiat has no intrinsic value, cryptocurrencies definately also have no intrinsic value, unless you can feed and shelter yourself with the factors of very large prime numbers
- nathias 5y ago
  We aren't suggesting anything, that's what fiat means. There are projects of cryptos backed with different things, for example stable coins with dollars, or synthetic stable coins with overcollaterized loans of other cryptos.
  - RugnirViking 5y ago
    if a cryptocurrency is backed by dollars, gold or anything else, it is not "intrinsically" worth anything, it is only worth anything because of what it is backed by.
    - nathias 5y ago
      that's what intrinsically means in this context, it's a dumb term but it is what it is
  - cuteboy19 5y ago
    But stablecoins are identical to central banks. They involve a central authority pinky promising not to print more of the token. And surprise surprise they do print as many as they want (USDT/USDC)
    - 5y ago

akamaozu 5y ago

This quote in the conclusion caught me off-guard: > Crypto messaging does not appear to be directed at the rational or sensible.

vondro 5y ago
Well, this piece has bits of reasonable analysis mixed with wishful thinking of central authorities it seems. Don't ask the winery owner if their wine is good, as they say. But anyway, it's very readable without almost any financial jargon, so anybody can read it and make his own mind on the topic.

surajs 5y ago

janandonly 5y ago

In Holland we have a saying that roughly translates as "don't let a butcher judge his own meat". I guess letting a Bank judge his own competitor is an even worse offence?

NicoJuicy 5y ago
Are you judging this as a user of the Blockchain? Which would be more appropriate to your quote, i believe. Ps. Heb alvast die uitdrukking nog nooit gehoord in België ( Never heard that expression in Belgium)
- me_me_me 5y ago
  10/10 Kings agree democracy is inferior to monarchy, therefore it will be banned.
- rapnie 5y ago
  Here's an explainer of the saying (in Dutch) and some possible English alternatives, like : "That’s like grading your own exam”. And literally a "conflict of interest". https://hoezegjeinhetengels.nl/slager-keurt-zijn-eigen-vlees/ https://hoezegjeinhetengels.nl/slager-keurt-zijn-eigen-vlees...
- jacquesm 5y ago
  "De slager die zijn eigen vlees keurt" Over het algemeen gebruikt als de producent een oordeel geeft over zijn product. als in "Wij van WC eend ..."
astoor 5y ago
Not really like-for-like though - in this case a more appropriate saying would be "don't let a licenced professional purveyor of meat with provenance trails judge unlicenced masked street-vendors of meat-like substances of unknown origin during a time of unprecedented household pet disappearances".
- thebean11 5y ago
  The inner workings of Bitcoin are a lot less unknown than those of banks or governments. You might not agree with the principles of Bitcoin, or the valuation, but it’s certainly transparent.

hd4 5y ago

> 37. We have seen that crypto-technology is underpinned by a philosophy to evade Government controls. Cryptocurrencies have specifically been developed to bypass the regulated financial system. These should be reason enough to treat them with caution. Well duh. Way to prove the point that we need to evade government control. Zero self-awareness. No examination into why people may not trust their government. Just do what we say. This from the same government that already demonetized* the currency used by the same people they want to be trusted by.

ajonit 5y ago
This from the same government that already devalued the currency used by the same people they want to be trusted by It was “demonetised”. To be fair and accurate context, a window of few months was provided to get the demonetise notes replaced with the equivalent amount of new notes.
- danuker 5y ago
  It is not the numbers on the notes that matter, it is the loss of purchasing power. In 1995, 1 USD = 32 INR. In 2022, 1 USD = 75 INR. Add to that the fact that USD is also losing value itself.
  - ajonit 5y ago
    Saying “devalued”, OP referred to the Nov 2016 demonetisation of INR 500 and 1000 currency notes that happened in India.
    - hd4 5y ago
      Correct, thanks for pointing that out, I edited the original comment.
  - ClumsyPilot 5y ago
    There are many things that happened in the global economy, banking, supply chains and multinational corporations. How much of this change is the fault of Indian government?

lekevicius 5y ago

Key conclusion: > All these factors lead to the conclusion that banning cryptocurrency is perhaps the most advisable choice open to India. And so they may, for probably 4th or 5th time. Cryptocurrency on- and off-ramps can be somewhat controlled, but overall it's a pretty difficult thing to ban in practice.

captn3m0 5y ago
The average investment (as per RBI) in crypto assets is 3000 INR or so, the vast majority of which is via crypto exchanges. The earlier bans were indirect (RBI asking Banks asking Payment processors to close down exchange ramps) and didn't stand up to legal scrutiny. A direct ban via legislation ought to work in practice. Exchanges (and other companies offering crypto in India) have already de-risked against this by getting registered in Singapore. A ban doesn't have to work perfectly, it just has to dissuade enough users.
- Proven 5y ago
- sundarurfriend 5y ago
  > A direct ban via legislation ought to work in practice. > A ban doesn't have to work perfectly, it just has to dissuade enough users. That much it can probably accomplish, especially given the current level of censorship of the Internet.
retube 5y ago
> but overall it's a pretty difficult thing to ban in practice. That applies to just about everything. We have laws against tax evasion, fraud, murder... but people can (and do) still do these things. Just because a law doesn't or can't physically stop people doing things doesn't mean we shouldn't have the law. The point is, if it is banned then you will severely constraint the ecosystem. On-off ramps and other intermediators will have to shut down, institutional participants will be forced to withdraw etc etc. Sure no doubt a handful of participants will flaunt the rules and continue to participate, trying to keep the dream alive, but for all practical purposes it'll be dead in the water.

hanselot 5y ago

g5095 5y ago

I work for one of the most well known, fully decentralised, opensource crypto currencies. I'm therefore quite familiar with our objectives (to take over the world, mwhaha) .. but no seriously: 1. Govts can (and should) regulate -exchanges- who are setting the exchange rate at the same time as offering to be the bank for poorly educated crypto holders, so they can use folks money to buy low and sell high. 2. Govts (already) make it a legal obligation to declare and pay tax, crypto is no different than dealing in cash. People who break the laws of their country should be tried under those laws, ie: tax evasion.. this isn't new to crypto. What the RBI are saying is they object to crypto removing their ability to.. (see point 1.) control the supply. When they talk about managing the economy, what they mean is 'their ability to print money'. Furthermore they argue their ability to make up the rules as they go is enshrined and justified by the notion that 'that's how it's always been done'.. well welcome to technological advancement? Crypto is FAR from perfect right now but it is based on a premise that a truly fair and un-cheatable system is possible, and that has govts terrified.

digitcatphd 5y ago
Unfortunately, I suspect this will continue. There is undoubtedly a place for Crypto, but I would advise those who believe it will replace 'fiat' to take a course in economics or learn the role of the federal reserve and why it was created in the US. Political views aside, many believe economic policy to be a key pillar of a government and anything threatening this power will be squashed at all costs in countries where this pillar exists. Where this pillar exists being the key here, which is why we are seeing national adoption in countries that lack it. Despite this, an outright ban is indeed lazy and removes a country from the global Crypto economy.
- m00dy 5y ago
  Just take a walk in one of the popular neighborhoods in Istanbul and ask who Jerome Powell is to one of the random people there. They will tell you. Federal Reserve was created for some reason in the past. But, I think we might need something better now.
  - 5y ago

insaider 5y ago

I hope other governments follow suit

honungsburk 5y ago

India doesn't have the power to use a block explorer. It is to advanced. >AEs have the political power to control the crypto companies. The recent instance >where the US recovered bitcoins from the hackers of the oil pipeline in US, is an >example that notwithstanding claims of non-traceability of cryptocurrencies, AE >Governments wield enough power to access the records. India or most other > countries would lack such advantages.

ClumsyPilot 5y ago
What? Why?
- sundarurfriend 5y ago
  I think it's a sarcastic comment, saying a "block explorer" is all it takes to trace these and implying that the document is dumb for saying otherwise. I don't know the details of the case well enough, but this is a usual type of comment on HN, and my a priori assumption would be it's probably oversimplifying reality and ignoring context as is also usual.
jeffparsons 5y ago
> claims of non-traceability of cryptocurrencies Uh, who's claiming that? Cryptocurrency transactions are _super_ traceable.
- bo1024 5y ago
  The same speaker claims it earlier, for one. The speech seems mostly well informed but that stuck out.
tejasvi88 5y ago
They are referring to > AEs have the political power to control the crypto companies. You won't find scammer's name on block explorer.

danuker 5y ago

> Thus, increased acceptance of cryptocurrencies would result in effective ‘Dollarization’ of our economy6. Dollarization, it is well understood, would undermine the ability of authorities to control money supply or interest rates, as monetary policy would not have any impact on the non-Rupee currencies or payment instruments. When that happens, India loses not just its currency, a defining feature of its sovereignty, but its policy control of the economy. With loss of traction for monetary policy, the ability to control inflation would be materially weakened. If I transacted in, say, cans of beans, would that also undermine sovereignty and control of the economy? Sounds to me that the mentioned sovereignty and control are very fragile. Sovereignty should come through consent of citizens and voluntary participation, not tyranny. And since the Rupee devalued 2.4 times against the USD in the past 27 years, I argue that such inflation control was abused, punishing savers and encouraging debt, essentially translating to financial repression.

horsestaple 5y ago
Yes, if you convinced a lot of people to transact in cans of beans, you would be undermining the control of the government. Just look at countries that don't have a (viable) currency. They are using dollars or euros and are subject to a foreign powers monetary policy. Also no country defines sovereignty through voluntary consent. Laws applies to you whether you agree or not.
- danuker 5y ago
  Democracy, as opposed to oligarchy, is where the people are ultimately sovereign. Sure, laws apply to the ones disagreeing, but in theory, the government serves the people, not rules it. Central banks however, have a large amount of control over everyone's financial life, yet the signal from voting is only very dimly forwarded to this institution, and there are limited checks and balances governing it.
simion314 5y ago
>If I transacted in, say, cans of beans, would that also undermine sovereignty and control of the economy? From what I seen in my country's past the government will always get the blame and is asked to pay when people get scammed, then the goverment adds new laws to prevent future scams. Say you borrow some money to buy a house and you use a foreign currency, and a year later that currency doubles, you get screwed. This actually happened and people asked the government to fix it. Sorry for poor details I don't like financial stuff so avoid it if possible https://www.businessinsider.com/the-swiss-franc-surge-crushed-many-europeans-financially-2015-2 https://www.businessinsider.com/the-swiss-franc-surge-crushe... https://en.wikipedia.org/wiki/Caritas_(Ponzi_scheme) https://en.wikipedia.org/wiki/Caritas_(Ponzi_scheme) It's obvious that giving the power to crash your economy to a foreign group is losing sovereignty, what happens if some hackers or government crashes bitcoin? I suspect the government will be blamed as usual because it did not see it coming and prevent it. As long as the government is not imposed by a foreign nation or some Illuminati then I would say the majority of the population should also take all the criticism not only the institution. IMO if the population wants the government to protect them from scams and foreign financial group playing with their money then it is what it is, a weakness of democracy, where majority rules.

yossarian1408 5y ago

The more of your own wealth tied up in a crypto asset, the more you have an interest in ensuring no manipulation occurs. An exact inverse to the speaker's thesis. Crypto is underrated for it's incentive solutions from a praxeological standpoint, not just the technical/cryptography one

bluecalm 5y ago
It's like saying that more aluminum you own the more you have an interest in ensuring no manipulation. Same for oil. No idea what praxeology says about it but it's definitely not what happens in the real world.
- yossarian1408 5y ago
  It's not like that at all. Aluminium is a commodity good - it holds value regardless of other people's valuations and expectations. Cryptocurrency is entirely dependent on other people agreeing that it is valuable, and that means trust and utility.
Traster 5y ago
That's not right though, the more you have invested in crypto the more you're incentivized to try and boost the value of crypto. That's not the same thing as saying no manipulation occurs. In fact, manipulation is good for you as long as it increases the value of crypto. If you plan to hold crypto long term manipulation might be bad in that it might damage the long-term prospects of crypto, but that's literally just a question of what time horizon your investment is vs what time horizon the manipulation happens. If Tether turns out to be a scam it only matters if it turns out to be a scam before you sell.
- yossarian1408 5y ago
  > If you plan to hold crypto long term No, if crypto becomes the dominant medium of exchange. In this way it would be determined by factors of supply and demand same as money has always been for thousands of years. The dollar is more susceptible to manipulation than crypto. If you cared about manipulation, you would be an advocate for literally anything rather than the petrodollar - crypto included.

crispyambulance 5y ago

They pretty much nailed it in the last paragraph... > Writing in the New York Times Adrian Chen noted as far back as 2013 that Bitcoin is built on a weird mix of speculative greed bolstered by a utopian cyberlibertarian ideology and likened it to a digital gold rush. Indeed, hyperbole continues to characterise all aspects of the crypto world. Crypto messaging does not appear to be directed at the rational or sensible. Adrian Chen's article... https://www.nytimes.com/2013/11/27/opinion/much-ado-about-bitcoin.html https://www.nytimes.com/2013/11/27/opinion/much-ado-about-bi... Dan Olson's now epic "Line Goes Up" https://youtu.be/YQ_xWvX1n9g https://youtu.be/YQ_xWvX1n9g ... a masterful takedown of crypotcurrency and NFT's, it also demonstrates what a shit-show this has all become. Much MUCH worse than in Chen's 2013 article.

dade_ 5y ago

A reasonable conclusion for advice to a government. Currency controls and manipulation are the most powerful controls nation state governments have. The important question remains, is what is good for the government, good for its people?

loup-vaillant 5y ago
> The important question remains, is what is good for the government, good for its people? If the answer is close enough to "no", then you know this is not a democracy.
- pinephoneguy 5y ago
Gareth321 5y ago
I am increasingly feeling that the majority in any democracy is willing to use authoritarian methods to achieve their goals. They are suspending due process in Canada because of a peaceful protest. This allows banks to freeze accounts and seize assets. This is what China does. If I were Canadian, I would be very concerned about the safety of my money in Canadian dollars in a Canadian bank. Canada is just the latest example of this kind of creeping authoritarianism. I wonder if they realise how much this will hurt the trust in the Canadian dollar and Canadian financial institutions, and the massive push for crypto adoption that will result.
- enkid 5y ago
  Democracy isn't about getting rid of government action. It's about enabling the people to control that action. These freedom convoys are protesting in an illegal way that disrupts people's ability to live their lives by blocking traffic, and have kept it up for weeks. At what point is the protest imposing unacceptable tyranny on the individuals who live on those streets? Certainly you would be against a government blockading people's homes.
  - 5y ago

jasfi 5y ago

Crypto trading is also interesting, if you're into technical analysis. I'm working on an automated system: https://tradecast.one https://tradecast.one

naveen99 5y ago

Banning cryptocurrency is as pointless as banning remote work or exports. India should just add us style property taxes instead.

whywhywhywhy 5y ago
> India should just add us style property taxes instead How's giving the government more money going to solve anything?
- naveen99 5y ago
  It’s just encouraging productive use of capital and a more transparent, liquid, financialized real estate industry. Probably good for the economy. Would reduce housing prices probably too.

bo1024 5y ago

This would have been reasonably accurate if Bitcoin was the only cryptocurrency. But no mention of dapps, web3, etc. means the speaker is missing a huge portion of the space.

Traster 5y ago

For me the most important part of this article is the comparison of how Bitcoin operates in the US vs other less powerful economies. Specifically how cryptocurrencies are primarily priced in dollars, the US has enough international power and control over the existing financial system to leverage control over crypto-exchanges, and how moving economic activity out of the Rupee into crypto-currencies significantly risks damaging the the rupee. This is something that is probably often missed by people in this conversation but it's very common in economies with weak currencies to see other strong currencies used in their place (plenty of places in Turkey accept dollars and euros for example) and this has a real impact on government policy.

eric_cc 5y ago
The hope is that in the future crypto breaks free of the connection to fiat. Rather than comparing crypto against $USD it will be compared against $BTC. This is why it’s essential for $BTC to maintain and expand upon its role as a source of value. It’s the best path we have to break the bondage to $USD and other government-controlled fiat currencies.
- nemacol 5y ago
  Forgive my ignorance but that sounds like comparing future crypto to the USD but with an extra step.
  - eric_cc 5y ago
    Sadly I think the only people that would do the extra step will be older people who grew up with USD and still desire it. Do you mentally compare USD to other random obscure currencies? Of course not. And in a future when USD has been replaced, nobody will care to mentally determine USD prices. Another way to consider it: when you go to the grocery store, you don’t think about how many sats something costs. Because USD is still king.
- xxs 5y ago
  >The hope is that in the future crypto breaks free of the connection to fiat wow, I don't know what kind of hope this is, and I avoid commenting on any crypto currency[0]. Since the comment appears to be genuine, I've felt compelled. [0]: calling it them "crypto" is an insult to the rest of the cryptography, though

boda11 5y ago

There is an actual useful use for cryptocurrencies which is sending money anywhere around the world instantly with small fees That is incredibly useful for developing countries and the ecosystem of p2p allow in and out to fiat in a relatively smooth way

blocked_again 5y ago
You do know that India has probably one of the best centralized payment systems in the world right? Read about UPI aka Unified Payment Interface.
- eric_cc 5y ago
  Nice try, India!
cuteboy19 5y ago
No one in India uses it for that purpose. UPI is significantly better than anything crypto has come up with. Crypto is purely a gambling vehicle in India
- boda11 5y ago
  can you send money to another country using UPI? if you can probably it uses swift under the hood crypto currency network replaces swift which is a more cumbersome system with higher price and delay of days to send money between countries
  - cuteboy19 5y ago
    So instead of one exchange rate you would need to deal with two. Not to mention the risk of the crypto in question being insanely volatile. Remittances are huge in India but no one really uses crypto for this purpose
Kbelicius 5y ago
Which isn't a technical but a political problem. So what you are saying is that cryptocurrencies are a technical solution to a political problem. I would love to hear more about that.

glofish 5y ago

Any bitcoin related assessment that cites the Tulip mania is inherently suspect. It conflates two different, unrelated concepts: the tulips and the mania. We have not banned tulips because of the Tulip mania. Bitcoin and blockchain are genius technology, on par with the greatest achievements in mathematics and theoretical physics. That some of this technology is misused and misinterpreted, incorrectly assessed, used for scams, has no bearing on the technology itself.

sailingparrot 5y ago
> Bitcoin and blockchain are genius technology, on par with the greatest achievements in mathematics and theoretical physics. How one can say that with a straight face is beyond me. And I say this as someone that find blockchain mechanisms/ideas very interesting.
- glofish 5y ago
  a distributed trusted ledger, where each selfish agent has to cooperate, while all transaction are out in public ... all on mathematical foundations, and it actually works in practice? how is that not genius?
  - sailingparrot 5y ago
    Yes it's pretty amazing I agree. I don't think your appreciation of blockchain is wrong. I think it is your appreciation for the greatest achievements in theoretical physics and mathematics that is.
  - bally0241 5y ago
    I agree with you one this...but for whatever reason it is not the prevailing opinion on HN. I think that is largely due to the fact that many people on here knew of it early enough to become fabulously rich, but dismissed it out of hand without really looking into it.
    - eric_cc 5y ago

logicalmonster 5y ago

When evaluating any information from any source, whether from a government or not, you should keep human biases in mind. The thing to keep in mind here is that India's bankers are giving their opinion on the current biggest competitor to their power and livelihoods. And the report says as much. > The basic purpose of blockchain, or more generally the distributed ledger, the technology on which these crypto-products run, is to make financial intermediation, and therefore banks, redundant. Imagine thinking any bureaucracy can give an honest assessment on the thing that makes them obsolete. Any opinion they give out should be evaluated through the lens of them losing their power and livelihoods. Any report from central bankers on crypto is the equivalent of McDonalds executives giving their opinion on Burger King.

throw3838 5y ago
Blockchain does not make banking obsolete. We can already do business by moving raw currency around, but hardly anyone does that. There is a whole crypt banking sector that provides exchanges, custody, lending... And if you take inflation overhead, consumed by miners and other services to keep BTC or ETH running (5% to 10% annually), there is not much advantage over existing banking.
- nextaccountic 5y ago
  > Blockchain does not make banking obsolete It doesn't, but Satoshi thought it would. See for example the Genesis block. > There is a whole crypt banking sector that provides exchanges, custody, lending... Back in the day, the idea was to make every citizen financially sovereign. It didn't work in practice because those services you mention are useful. (Just like crypto has trouble working as a payment infrastructure, because chargebacks are an useful and demanded service)
JumpCrisscross 5y ago
> India's bankers are giving their opinion on the current biggest competitor to their power and livelihoods Some of crypto’s biggest backers are on Wall Street. For obvious reasons. Crypto is making Wall Street billions while letting them preach from beneath a populist veneer.

crhutchins 5y ago

They are making ties and connections on fiat and cryptocurrency, which is not very good for the long term.

wtmt 5y ago

Some context to note: * The RBI (Reserve Bank of India) Governor and Deputy Governor have, more than once, publicly expressed the view that all cryptocurrencies should be banned for all purposes. A few years ago the RBI even instructed banks not to work with cryptocurrency exchanges, but that was overruled by the Supreme Court two years later with the justification that there was no law to do that and that this action was disproportionate. * The Prime Minister of India, Narendra Modi, has publicly made statements that cryptocurrency is “spoiling the youth” and that all countries should come together to control (which in his view is banning) them. * In the recent annual budget announcements, the finance minister announced an unexpected 30% tax on all income from “virtual digital asset transfers” without allowing any set offs (except the base cost). Also added was a 1% TDS (tax deducted at source, or tax withholding) for every transaction calculated on the transaction amount! Given these biases against cryptocurrencies and the strict need for capital and current account controls on Indian Rupee transfers that the RBI is addicted to manage (it actually prefers a steadily but continuously depreciating Rupee), it’s not a surprise that public utterances about macroeconomic stability would be published as a stance. The RBI and the Finance Ministry have been struggling to get a grip on the economic levers (with COVID making it worse), and believe that anything they cannot control easily is a threat to them, first and foremost. The Indian government is more focused on protectionism and controls than on capitalizing on opportunities.

ngc248 5y ago
>>> The Indian government is more focused on protectionism and controls than on capitalizing on opportunities. Crypto is an opportunity? Heck no, when you want to replace the existing system there must be some outstanding benefit which the new system should provide. Crypto has no such thing. In fact it would be trivial for the government to come out with some e-currency since UPI (https://en.wikipedia.org/wiki/Unified_Payments_Interface https://en.wikipedia.org/wiki/Unified_Payments_Interface) is already in place.
- csomar 5y ago
  I think the parent poster means: Opportunity to use crypto to generate positive capital flows.

actuator 5y ago

I think this seems like a fair evaluation of it. There is good reason why common public should be dissuaded from thinking of it as currency. There are some guarantees that people get with the current system. - Money you hold in a bank can't just evaporate if the bank collapses. It is insured in most countries like US, UK, EU upto an amount. - Even on things we speculate, lik stock prices just because your broker collapses doesn't mean you lose the stocks you own. In case of crypto, your broker can go down with keys to your crypto.

jrm4 5y ago

For a document created by a government, I'm wildly impressed. Pretty solid. Very unsurprised at the skepticism, of course. There's a lot of to-be-expected fear over loss of power, but even as someone who believes crypto can be a good thing eventually, I appreciate this analysis.

dav_Oz 5y ago

> 20. Historically, private currencies have resulted in instability and therefore have evolved into fiat currencies over centuries. The retrograde step back to private currencies cannot be taken simply because technology allows it (it always did, actually) without any consideration for the dislocation it causes to the legal, social and economic fabric of society. Every private currency will eventually replace the Rupee to some extent. Consequently, the role of the Rupee as a currency will be undermined. With one or more private currencies being allowed, there would be parallel currency system(s) in the country. Thus, increased acceptance of cryptocurrencies would result in effective ‘Dollarization’ of our economy. Dollarization, it is well understood, would undermine the ability of authorities to control money supply or interest rates, as monetary policy would not have any impact on the non-Rupee currencies or payment instruments. When that happens, India loses not just its currency, a defining feature of its sovereignty, but its policy control of the economy. With loss of traction for monetary policy, the ability to control inflation would be materially weakened. The paper misses the context in which Bitcoin emerged. The "Global Financial Crisis" woke up a lot of people to the reality of "fiat" (dixitque Nixon fiat pecunia et facta est pecunia) and its implications. During this time in Germany Merkel coined the words "Bankenrettung" ("rescue of banks") and "alternativlos" ("no alternative"/"the only way"). This indeed did cause - at least in the western wolrd and in some parts of the middle class - a dislocation [...] [of] the legal, social and economic fabric of society. Now, today, 15 years later the vast majority of the so called cryptocurrency-market does not even try to emancipate itself from the financial power that be, no, it has been effectively captured and tamed by "AE" and become one of their convenient tools they can use to "destabilize" EE's, playground for CBDC, another rigged enrichment game ... The people who became "lambo" realized pretty fast how convenient the system is once you are rich. So they mostly don't really challenge the establishment except in "style", too "risky", ya know.

bitcoinmonger2 5y ago

> For all the hype about a revolutionary innovation, cryptocurrencies themselves do not appear to be designed to meet any need in the finance space that is currently not being met or to meet existing needs more efficiently. Why go through the effort of a ban? Sounds like it will die off naturally.